ooooh, so thats what that is.. i had noticed the two numbers.
That said, doesn't it make more sense to calculate SBD against vesting fund steem, not against total market cap? (i realize the difference is trivial at this point), to measure debt exposure?
Since SBD has to come from vesting steem, the real measure of debt to ownership (and thus the risk from debt exposure) would be
vesting_fund_steem ÷ (virtual_supply - current_supply)
It does not. The vesting fund is SP balances.
IIUC, redeemed steem$ (SBD turned into steem through the convert steem $ function in the wallett) come out of the vesting fund. Where do you think the steem comes from when you convert SBD? Its not from mining that i can see, its not from liquid steem and it can't be created ex nihilo.
If enough people redeemed enough SBD at once, SP balances could run backwards (though there isnt enough SBD in circulation to do this now in any significant way.)...
Thats how they get the min 20-1 ratio debt to ownership ratio discussed in the white paper.
So they create say 4 steem per block for rewards (ignoring the POW). Block creation and liquidity (1 steem each) is paid in vests. Curation and blogging are paid half and half in vests and SBD. SO a total of 3 steem worth of vests and 1 steem worth of SBD
Then they create 10x steem for the vesting fund for every 1 steem thats created that way. So under the current system, for every 1 SBD +3vests created there are 40 steem added the the vesting fund. Thats a 40-1 ration of DTO.
I think this could go as low as 20% because the 50-50 split between steem and vests for blogging and curation can go to 100-0 either way, or anywhere in between. but im still figuring that part out.
Actually, it is. When SBD is created, its initial backing is supplied by the post's reward STEEM. Any fall in the price of STEEM will result in a rise of the virtual supply (and conversely, any rise in the price of STEEM will result in a fall of the virtual supply).
Basically if you have SBD, it's like owning the backing STEEM with two differences:
This is how leverage works.
Id venture to guess that you don't know very far then. SO your contention is that these steem used to pay SBD are just created out of thin air on redemption?
@theoretical
POsts are not rewarded with steem.... They are rewarded with SBD and vests.
In response to those rewards, steem are created and placed in the vesting fund. Those created steem are what backs SBD.. they are created by mining, so i suppose you could say theyre created by nothing.
You got this opposite... a decrease in the steem marketcap actually gives you profit with SBD, but yeah youre right. The loss is socialized as a loss to the vesting fund.. Because when SBD are redeemed, they are taken out of the vesting fund. thats why if enough ppl convert SBD< the steem represented by your SP balance would become lower.
All an SBD is is a debt instrument drawn on the vesting fund.
Thats why (and this was the initial bone of contention) the real measure of SBD debt exposure to the system is a comparison between SBD supply and vesting shares. Becuase SBD redemption comes out of vesting shares.
As far as I'm aware, this is totally false.
Here to you refer to virtual supply so I wanted to presume no new vests are created after the initial creation of SBD, but then you wrote:
Ah so the supply of vests is adjusted when the SD (aka SBD) are converted to STEEM.
But I don't understand, then why do I have to sell my SBD on an exchange when you could just transfer the backing vested to me? Who gets the backing vests then, or is it impossible to ever retire the SBD so then why do we need the backing vests?
And thus the trusted oracles for the exchange rate control the creation of new money supply.
So then why create initial supply of vests before the SBD are converted to STEEM? What purpose does that premature estimate serve? Surely coinmarketcap.com needs to account for the market cap in SP+STEEM+SBD any way, if they want accuracy.
The vesting fund apparently also includes the backing for SBD.
Are liquid STEEM also backed by specially tagged vests, or are they accounted for separately? I realize it is just irrelevant backend semantics though, i.e. doesn't reflect on the math whether STEEM are named "STEEM" or "vests with a special tag".